WPC queries trustee decision to transfer pension surplus to Bristol Water

The Work and Pensions Committee (WPC) has written to the trustee of the Water Companies’ Pension Scheme following member concerns over the decision to transfer the remaining Bristol Water Section surplus to the employer.

The committee was contacted by scheme members following the trustee decision to transfer the estimated remaining £12.1m surplus to Bristol Water.

Wind-up has begun on the section and the process is expected to be completed by the end of the year, according to the WPC, and an annuity was purchased in June 2018 to insure member benefits.

In the letter, the WPC noted that members informed them there was a provision in the section’s rules stating that the trustee “may, in consultation with Bristol Water, use any surplus to augment members’ benefits if and to the extent that it considers it just and equitable to do so”.

The members stated that, in their view, the trustees decided to transfer the remaining surplus to the employer “without adequate consultation or explanation”.

In light of this, the WPC asked the trustee whether the section rules provide the power to use the surplus in the scheme on wind-up to augment benefits and, if so, whether this was considered.

If the trustees decided not to exercise this power, the committee asked for justification of the decision, queried whether actuarial advice was sought and, if employee and employer contributions to the scheme were a factor, over what period these were considered.

It also asked how members were consulted on any decision to return the surplus to the employer and what steps were taken to ensure all members were contacted.

Finally, the WPC wanted to know when each of the member-nominated trustees/directors were appointed and what arrangements were made for involving scheme members in the nomination and selection process.

“My committee rarely considers individual cases except where these illuminate more general policy and operational matters,” WPC chair, Stephen Timms, wrote.

“In this instance, I am considering asking my committee to discuss whether the legislative protections available to members of pension schemes regarding rights over surpluses and their ability to elect trustees are effective and sufficient.”

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